Yes, America Needs to Be More Like Denmark

Democratic presidential candidate Bernie Sanders has a good point -- America needs to be more like Denmark and the other Scandinavian countries. But he’s wrong about the reason why. He thinks socialism is the cause of their success, but the true cause is their older free-market culture and their recent efforts to return toward market and economic freedom.

Since the 1990s, Denmark, Sweden, Finland and Norway have expanded private property rights, business freedom, investment freedom and financial freedom. Each of these countries has increased its score on the Heritage Foundation/Wall Street Journal Index of Economic Freedom, and Denmark now outranks even the United States as a good place to do business.

Sanders sees the size of the Scandinavian welfare states and the relative health and happiness they enjoy, and thinks this correlation proves causation. A deeper look at the history and current affairs of Denmark and the surrounding countries tells a different story, however. These countries’ benefits arguably spring from their free-market pasts, not their brief dalliance with big government.

A Free Market Culture Under Attack

Scandinavian countries are well known for their unusually high levels of trust, a strong work ethic and an emphasis on individual responsibility. These traits are not the result of socialistic welfare states, but the explanation for why such bloated government programs could be implemented in the first place.

“In the early days, the unique culture of success in the Nordic countries meant that high taxes and welfare benefits could be introduced" with the negative side effects delayed, wrote Nima Sanandaji in her 2015 book Scandinavian Unexceptionalism: Culture, Markets and the Failure of Third-Way Socialism. During the early 1900s and following the Great Depression, Scandinavia's small government and free markets fostered a culture of hard work that paid huge dividends in terms of prosperity.

The success of these countries enabled the government to expand, as the wealth of average citizens allowed them to pay more taxes. More importantly, the culture of hard work meant few people tried to live off of welfare and "game the system." After big governments were introduced however, the culture changed -- for the worse.

The Scandinavians who left for the United States mark this change well -- Sanandaji notes that Americans with Nordic ancestry are thriving better than their relatives back in Denmark, Norway and Sweden. Contrary to Bernie Sanders' belief, the 1960s - 1990s expansion of welfare states actually held the Nordic countries back.

After their experiment with socialistic welfare states, “Nordic citizens now have unusually high levels of sickness absence (despite being healthy societies), high youth unemployment and a poor record for integrating migrants into the labour force,” Sanandaji explains. Big government has weakened the strong culture which enabled welfare states in the first place, and these countries know it.

In 2013, a Danish woman on welfare made the news. A liberal member of Parliament challenged the free-market politician Joachim B. Olsen to actually visit a single mother of two on welfare, and see how hard her life is.

Olsen took the advice, and learned that being on welfare isn’t so hard after all. The 36-year-old single mother, known as “Carina,” was making more money than many of the country’s full time workers, the New York Times reported. “All told, she was getting about $2,700 a month, and she had been on welfare since she was 16.”